Initial Public Offering on the Empire State Building Nears Pivotal Test

The 15-month long effort for taking the Empire State Building of New York public is nearing a crucial ruling in a legal challenge made by the investors. Incidentally, these investors oppose the deal which was put together by the family with the controlling power of the iconic skyscraper – Malkin family. On 29th April, the Justice of New York State Supreme Court, O. Peter Sherwood is expected to decide whether the unit holders who are objecting this possible transaction can be bought out for a price of $100 per share, as mentioned in the plan or not. Incidentally, Sherwood earlier stated that he could throw out the votes which the Malkin family received earlier, thereby getting approval for the plan, if he feels that the provisions made are illegal. A hearing is also expected to be held by Sherwood soon on the $55 million class action settlement which is opposed by the some of the 2800 plus investors of the tower.

According to the Professor of Real Estate Finance Law at the Brooklyn Law School, David Reiss, this represents a sort of watershed moment for this case. Incidentally, if this proposal sees the day of light, it will be the 2nd biggest initial public offering of a US Real Estate Investment Trust on record. On 3rd April, Peter Malkin, who is the Chairman of the Malkin Holding LLC and his son Anthony, who is the President, jointly stated that more than 75% of the stakeholders of the skyscraper have voted on favor of the proposal. Incidentally, to move forward with the plan, Malkin family needs at least 80% of the total votes and they already have started to call holdouts in an attempt to gather the required support. Malkin family recently stated that they will leave voting open until Sherwood makes a ruling on the $100 per share buyout or until 2nd May, which is the scheduled day for the hearing on the class action settlement.

According to the proposal, the new company will be named as Empire State Realty Trust Inc., which is expecting to raise around $1 billion for the REIT, which will be including the 102-story tower and also 20 other properties that the Malkin family supervises currently. In the industry, only the debut of Santa Monica was bigger than the current proposal, at $1.6 billion.

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